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How Much Are Closing Costs On A House?

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Key Takeaways
Average Closing Costs: $6,000 – $18,000 (2% – 6% of the home sale price)
Buyer’s Costs: Loan origination fees, home appraisal, insurance
Seller’s Costs: Realtor commissions, transfer taxes
Shared Costs: Prorated property taxes, escrow fees
Factors: Location, loan type, property price
Savings Tips: Negotiate fees, shop around for services

$6,000 – $18,000 Average Closing Costs

When purchasing a home, closing costs are an important aspect to consider. These can typically range from $6,000 to $18,000 and usually represent about 2% to 6% of the home’s sale price. Understanding the scope of these expenses can help buyers and sellers plan accordingly.

2% – 6% Of The Home Sale Price

On average, closing costs fall between 2% and 6% of the home’s sale price. This percentage may vary based on several factors such as the type of loan, the location of the property, and the specific services required during the closing process.

Average House Closing Costs

Home sale priceAverage closing costs*
$150,000$3,000 – $9,000
$250,000$5,000 – $15,000
$300,000$6,000 – $18,000
$450,000$9,000 – $27,000
$500,000$10,000 – $30,000

Looking at these figures, one can see how the closing costs scale with the value of the property. This table provides a helpful reference for estimating potential closing expenses.

What Are Closing Costs?

Closing costs encompass all the fees charged by lenders and third parties related to the purchase or sale of a home. These fees include everything from loan origination fees and title searches to appraisals and insurance. It is crucial to budget for these expenses as they can add up quickly.

House Closing Cost Calculator

Mortgage closing costsAverage cost*Typically paid by
Loan origination fee$1,500 – $5,000 (0.5% – 1.0% of loan)Buyer
Underwriting fee$300 – $900Buyer
Home appraisal cost$350 – $600Buyer
Homeowners insurance cost$50/month per $100,000 in home valueBuyer
Discount points1% of the total loan amount per pointBuyer
Flood certification$25 – $50Buyer
Lead-based paint inspection cost$300 – $700Buyer
Pest inspection cost$50 – $200Buyer
Private mortgage insurance (PMI)$30 – $700/month per $100,000 borrowedBuyer
Rate lock fee0.25% – 0.50%Buyer
Title insurance$2,500 – $5,000 (0.5% – 1.0% of sale)Varies
Property survey cost$200 – $700Buyer or seller
Escrow (settlement) fees$350 – $1,000Split
Prorated property taxesVariesSplit
Transfer taxesVariesSeller or split
Realtor commissions5% – 6% of sale priceSeller
Title search$100 – $500Varies by location
Recording fees$125 – $200Varies by location
Attorney fees$500 – $1,000+Varies by location

Buyer’s Closing Costs

For buyers, the primary closing costs include loan origination fees, home appraisal costs, and various insurance expenses. These costs are usually the responsibility of the buyer and are essential for securing the mortgage and ensuring the property’s value.

Seller’s Closing Costs

Sellers incur closing costs primarily through realtor commissions, transfer taxes, and any settlement fees agreed upon during the sale. These costs typically come out of the sale proceeds and can be negotiated with the buyer.

Shared Closing Costs

Some closing costs are shared between the buyer and the seller, including prorated property taxes and escrow fees. The specifics of these shared costs can vary based on the terms of the sale and local customs.

Home Closing Cost Factors

Several factors influence the closing costs associated with buying or selling a home:

  • Location: Different states and municipalities have varying fees and tax rates.
  • Loan Type: The type of mortgage can affect the fees charged for obtaining the loan.
  • Property Price: Higher-priced properties tend to have higher closing costs.
  • Service Providers: The choice of appraisers, attorneys, and other service providers can impact the total cost.

How To Save On Closing Costs

Saving on closing costs can make a significant difference, especially in high-cost transactions.

  1. Negotiate Fees: Attempt to negotiate lender fees, and ask for discounts or waivers.
  2. Shop Around: Compare rates from multiple lenders, insurers, and service providers.
  3. Close at the Month’s End: This can reduce prepaid interest charges.
  4. Ask Seller to Contribute: Request seller contributions towards closing costs as part of the negotiations.

FAQs About House Closing Costs

Who Pays Closing Costs When Selling A House?

Closing costs are typically divided between the buyer and the seller. Buyers usually cover the costs related to securing the mortgage, while sellers handle realtor commissions and transfer taxes. However, the specific allocation can be negotiated.

Are House Closing Costs Deductible?

Certain closing costs, such as property taxes and mortgage interest, may be deductible on your federal tax return. It is advisable to consult a tax professional to understand the eligible deductions and how they apply to your situation.

How Do I Calculate Closing Costs On A House?

To calculate closing costs, consider the home sale price and apply a percentage, usually between 2% and 6%. Additionally, using a closing cost calculator or seeking a lender’s detailed estimate can provide a more accurate figure.

How Do I Avoid Closing Costs When Selling A House?

While it may not be possible to avoid closing costs entirely, you can reduce them by negotiating with the buyer to share or cover some expenses, shopping for lower-cost service providers, and understanding the typical fees to identify any hidden or unnecessary charges.

Questions To Ask A Real Estate Agent

When working with a real estate agent, ask about:

  • Experience: How many transactions have they handled?
  • Fee Structure: What are their commission rates and any additional fees?
  • Local Market Trends: Insights on property values and competition.
  • Recommended Service Providers: Referrals for appraisers, inspectors, and attorneys.
  • Negotiation Strategy: Their approach to negotiating on your behalf.

Careful consideration of closing costs and proactive measures to manage them can enhance your home buying or selling experience, making the process more efficient and potentially saving you a significant amount of money.

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